ITC divests former hotel business: What does it mean for its shareholders?
ITC shares traded in the hotel business on January 6, 2025 after a special pre-opening session of ITC concluded at 10:00 a.m. to indirectly value ITC Hotels.
On the NSE, the stock opened at Rs 455.6 per share, while on the BSE the stock opened at Rs 455 per share.
On the basis of earnings, Equinomics analysts have pegged ITC Hotels at Rs 264 per share and are of the view that ITC Hotels’ valuation is in line with Indian hotels.
For ITC hotels, the price will be calculated as the difference between the ITC closing price on January 3, and the ITC price received during SPOS. This process helps to find a fair value for ITC Hotels shares before they start trading officially.
As per analysts and brokerages, the price of ITC may be adjusted by Rs 22-25 due to the dampening effect.
Today is also the record day for the company’s sale, which means that shareholders’ eligibility for shares of the demerged entity will be determined today on the basis of the ITC shares held by investors in their portfolios today. Under the split plan, ITC shareholders will be eligible to receive 1 share of ITC Hotels for every 10 shares they hold. Accordingly, ITC will hold 40 percent of the business of the newly demerged hotels and the remaining 60 percent will be held by existing shareholders in proportion to their holdings in ITC.
Listing of ITC hotels and their pricing
ITC hotels as per Zee Business survey estimates may be listed in the boze in 30-40 days. Further, until the listing, the shares of ITC Hotels will be reflected at a fixed price on all indices of which ITC is a member. In the Nifty and Sensex indices, the stock will rank 51st and 31st respectively, and will remain in the indices for three trading sessions following the listing.
In the event that the stock reaches the regional limits, the release will be postponed by two trading days each time.
Brokerage firm Nomura had expected a listing price for ITC Hotels in the range of Rs 200-300 per share.
Impact of shareholders:
Satish Chandra Aluri, Lemonn Markets Desk says that this corporate action will affect the shareholders of bluechip stock-ITC.
1. Dual Ownership: Shareholders get exposure to ITC hotels without additional investment, allowing them to benefit from growth in the hospitality sector alongside ITC’s core businesses.
2. Re-Rating Opportunities: Analysts expect ITC’s independent valuation to be more closely aligned with FMCG peers due to improved return ratios and focused growth. At the same time, ITC Hotels may emerge as a high-quality stock with well-designed growth strategies.
